Optimal normalization policy under behavioral expectations

• 成果类型: Article
• 署名作者: Carrier, Alexandre; Mavromatis, Kostas
• 署名单位: European Central Bank; De Nederlandsche Bank NV; University of Amsterdam
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2025.103786
• 发表日期: 2025
• 关键词: Optimal monetary policy; De-anchored expectations; Normalization strategy

摘要

We characterize optimal normalization policy in a framework in which agents' expectations can deviate from the rational expectations benchmark and the central bank faces cost-push shocks. When interest rate fluctuations are costless, our findings indicate that the interest rate is the primary tool for managing inflationary pressures, consistently outperforming balance sheet adjustments, regardless of the expectations formation process. However, under de-anchored expectations, an increasing role for balance sheet management arises when interest rate fluctuations become costly. Finally, our analysis reveals that expectations significantly influence the optimal interest rate trajectory, whereas their impact on the optimal balance sheet path is comparatively minimal.